You can buy them from apple for the ibooks app. There are also apps that let you buy books from Kobo, sony, and amazon. I'm Canadian too, and i find apple's ibook prices higher than kobo and amazon - i haven't purchased from Sony for a long time, so can't comment.

You can also borrow books from the library to read on your kobo app. Also there are a lot of free books - such as here at mobileread - but they are older books in the public domain, and you said you wanted contemporary. I'm not up on fan fiction, and other similar types of fiction, but i think believe there are sites where you can read those for free as welll.

I'm thinking of buying an iPad Mini to use as an eReader. I'm in Canada. Where will I be able to purchase downloadable books? I'm mostly interested in recently published books.

In addition, to what Victoria wrote:
You can buy ePUBs from (almost) any source you want.
There are quite a few reader apps for iOS (doesn't matter, whether you use these on iPad 1/2/3, iPad mini or iPhone), which support Adobe DRM (ePUBS or PDFs).
Bluefire reader or txtr app for example.
You simply can buy on any website. Download via Adobe Digital Editions. Then load those ePUBS via iTunes into the respective app.
You don't even have to strip the files from their respective copy protection. You can use them directly, as you've downloaded them via Adobe Digital Editions.

And:
Legal or not (depends on various issues, such as your location, the source of the books and such): Technically, it's relatively easy to strip any purchased eBook from copy protection. Then you can convert into other formats. Whatever app you're using: The source file, without copy protection, can be converted to a format readable by your favorite app.